McElrath v. Dupuy

The judgment of the court was pronounced by Kino, J. Cavern and wife, by an act of sale bearing date the 31st of December, 1834, sold to Fowles Sf Green, a tract of land for §15,514 CO ; of which sum §4,000 was paid in easlr, and for the residue of §11,514 CO, a note was-given, payable live years after its date, bearing ten per cent interest, and a mortgage retained on the property sold to secure its payment. This land, after several mesne conveyances, was purchased by Gibson. After the death of Cavern, the plaintiff, as his administrator, instituted a suit against Fowles Sf Green, as the makers of the note secured by the mortgage, and against Gibson as iho third possessor of the hypothecated property. A judgment was confessed by Gibson for the sum claimed, with a right to enforce it on theBands described’to the sale from Cavens to Fmoles Sf Green; but the mortgage is not recited, nor referred to, either in the confession or the judgment. Fowles Green made Ho defence, and no action appears to have been taken in relation to them in the suit. Before a sale could be effected under this decree, Gibson died, and shortly after that event the plaintiff presented an application to the probate court for' a sale of the land mortgaged, setting forth the fact of the special encumbrance to which it was subject, and the previous judgment by confession. In this proceeding R. H. Chinn intervened, alleging that he was a creditor of Gibson, and that his demand was secured by a special mortgage on the laud on which the plaintiff was seeking to enforce his claim. He alleged that the judgment against Qibson was fraudulently obtained, by reason of which it was Hull; that, at the time it was rendered, there was nothing due to the succession of Cavens by Gibson; that the mortgage retained by Cavens was not so recorded as to operate a notice to third persons; and that the rights of the intervenor, as a mortgagee, were not affected by such registry as had been made; and finally, he denied the identity of the note sued on with that described in the mortgage. The claim of the intervenor is resisted both by the plaintiff and the defendant, on the ground that the notes on which he founds his demand were given in error; that the consideration was professional services, for which the charge was exorbitant. The court below rendered a judgment in favor of the plaintiff for tho entire amount of his claim, recognising the vendor’s mortgage, and giving i!. [522] priority over that of the intervenor; anda judgment in favor of the intervenor for the sum claimed by him, with a right of mortgage next in rank after that of the plaintiff. From-this'judgment the intervenor has appealed.- The evidence adduced by the plaintiff in support of his claim in the'court below, was the judgment rendered by the District Court upon Gibson’s con-fession, theact of sale from Gavens-, with the-mortgage retained,- certified to be duly registered in the mortgage office, and a note corresponding- in amount and in the time of its maturity' with that described in the- mortgage, but bearing date a day later.’ The evidence leaves no doubt that this note is the same intended to be secured by the mortgage. No credit appeared upon the note when offered in evidence, and no reference is made in the pleadings or judgment to any credit to which it is entitled. During the progress of the trial a paper was-discovered to be pasted over the back of the note, on the removal of which the' following endorsement appeared: “Received1 of T. J. Green, Esq., a note of James- R. Blunt, for' eight thousand three hundred dollars, due Jan’y , eighteen hundred and thirty-nine, bearing interest at eight per cent. Principal and interest up to first June,-1839, $8,604 34. May 12, 1839. Warren county, Miss. (Signed) G. W. —=-, of the estate of Elijah Cavens, dec.” Lines are drawn across this endorsement, and the pen passed heavily over the signature, leaving only the two initial letters, G. W. of the plaintiff’s name-distinguishable. This endorsement is shown to be in the hand-writing of McElrath. The plaintiff has endeavored to showthat the endorsement was made in error, and subsequently stricken-off for that reason, and the credit given ow another note of Fowles Green, of which he, as administrator of Cavens, was-the holder, to which the payment was properly imputable. The evidence for-bids that conclusion. The note on which it is contended the credit should have-been given was not executed until June, 1840, long after the transfer of Blunt’s note, and more than a year after Blunt's administrator had made a large payment on account. The debt itself had no existence for more than a year after the payment made to the plaintiff, and whether it was to arise depended on a-future contingency, the happening of which could not have been forseen by the parties. At the date when the payment was made, there was a large subsisting, debt from Fowles &f. Green to Cavens, bearing the highest rate of conventional, interest, and encumbering a valuable estate with a mortgage, both of which the debtors had the strongest interest in extinguishing. Is it to be presumed, in the absence of proof, that, with such motives to-discharge a subsisting debt of the most onerous character, the debtors intended to apply their funds to the payment of a debt which did not-exist, and which it could not positively be for-seen ever would ? The evidence rejects every other conclusion than that the credit was endorsed on the note sued npon, in strict accordance with the intention of the parties when the payment was made; and other facts disclosed by the evidence, to which it is not necessary to advert, support this view. The debt and mortgage were extinguished to the extent of the payment affected by the transfer of Blunt’s note, and it was not in the power of parties to revive them to the prejudice of third persons, by consenting that tbe payment should be imputed to another debt. The position assumed, that the credit was stricken rom this note and placed upon another with the consent of the only parties in [523] devested in tli© imputation, is equally untenable. At that date Gibson-Vías the owner of the land mortgaged to secure the payment of the note, and the inter■venor held a mortgage on it to secure his demand. Both of these parties were -therefore interested in the reduction of the encumbrance. The fact of this payment was not communicated to Gibson, and the evidence leaves no doubt that he confessed the judgment in error, and in utter ignorance of the partial discharge of the debt and mortgage. To the extent of that error the judgment rendered by the District Courtis void. But this nullity is not to ■be visited on the creditors and heirs of Cavens, who were not instrumental in producing the result. They are entitled to the benefit of the judgment, for the .■amount really due. Neither the principal, nor the interest, of the note sued on was due at the ■date of the payment. The credit is, therefore, not to be applied in accordance with the 2160th art. of the Code, to the interest, but to that part of the debt which the debtor had the greatest interest in discharging, which was the principal, as upon that interest was accruing. This payment deducted from the principal leaves $2,010 26, due on the 1st June, 1839, bearing interest at ten per cent from that date; and the further sum of $5,085 60, interest which accrued previous to the 1st June, 1839, which bears no interest. It is contended that the mortgage retained to secure this note 'has become extinct, not having been re-inscribed within ten years from its first registry. It was recorded on the 4th of February, 1836. The plaintiff urges: first, that the recording on the 11th of May, 1841, of the judgment rendered by the District Court, was a re-inscription; secondly, that from the date of Chinn’s intervention in the suit in 1842, he had notice of the existence of the mortgage., .and that, pending the litigation, the object of which was to enforce the mortgage, no prescription ran between the parties. Neither the confession of •Gibson, nor the judgment rendered upon that confession, recite, or make any reference whatever to, the mortgage in favor of Ca-sons’ succession. The registry of that judgment was clearly not a compliance with the 3333d art. of the Code, and was not are-inscription of the mortgage. After this case was first taken under consideration, the question which presents itself relative to the peremption of mortgages, underwent an elaborate .argument in the case of Shepherd v. The Orleans Cotton Press Company, ante p. 100. We there held that,-with regard to inscribed mortgages, “the delay often years is in all cases fatal, and, if it be permitted to expire without a re-inscription, the mortgage loses its rank; and that a litigation between the mortgage creditors does not dispense with this re-inscription.” We conclude, therefore, that the plaintiff has lost all the hypothecary rights resulting from the mortgage retained by Cavens,as regards other creditors, and can only rank as a .creditor of Gibson, with a judicial mortgage to take effect on the 11th of May, 1841. This conclusion renders it unnecessary to consider several questions originally deemed of importance in the cause. The intervenor founds his claim upon three notes for $4,500 each, .dated the 3d of February, 1840, bearing seven per cent interest from their date, the payment of which is secured by mortgage. The consideration for which they were given was professional, and other, services, rendered to Gibson, for which the charge is alleged to be exorbitant. Those services were rendered in efforts to collect claims amounting to about $135,000, the recovery of which Gibson, at fihe time, considered to be doubtful. The intervenor, in answer to an interroga [524] tory propounded .to him, says, that by the terms of the agreement between Gibson and himself, his compensation was made “wholly contingent upon successfully pursuing the claim; that it was to be commensurate therewith, liberal and adequate; and, if unsuccessful, he \yas to receive nothing for his skill, toil, .and expenditure of tinje and money. “In the prosecution of the claim he instituted three several suits; left the city of New Orleans, where he resided and exercised his profession, and repaired to a distant part.of the State, where he'performed various and laborious duties, many of them not strictly appertaining to his professional engagement; and finally affected a compromise, which was entirely satisfactory to his .client. After the services were completed, tho compensation was fixed by the mutual agreement of the parties, and the sum agreed .upon was secured by a mortgage. Witnesses were called on the trial below, to .estimate the value of the intervenor’s services, but the parties themselves having established their .value, and no error haying been shown, effect must b,e giv, ,en to their contract. After this cause was heard in this court, the interyenor died ; and since that .time his administrator has,been made a party to this appeal. For the roa.spns assigned, it is ordered that the judgment of the Probate .Court be reversed. It is further ordered that the plaintiff, as administrator of ¡the succession of Elijah Cave?.is,, deceased, be adjudged to be a creditor of the .succession of Clandifis Gibson, deceased, for the sum of $2,910 26 cents, with ,ten per .cent, interest thereon, from the first day of June, 1839, and for the further sum of $5,085 6.0 cents, without interest; both of said sums to rank as a, judicial mortgage claim, to take effect on the 11th of May, 1841. It is further .ordered .that Nathan Jarvis, as administrator of the succession ,of the intervenor, Richard il. Chinn, have judgment and recover from the defendant, the sum of $13,500, with seven per cent yearly interest thereon, from the 3d of February, 1840, until paid; and that he be adjudged to be a creditor of the .succession of said Claudius Gibson, by a mortgage to have effect from the 3d day of February, 1840, on a tract of land lying in tlje parish of Carroll, fronting .on the Mississippi river, bounded above by lands of William Henderson, and .below by land sold by Gibson to John Mitchum, containing about 1,580 .acres, being the same conveyed by J. M. January to Claudius Gibson, and .described in a.certain a,ctof mortgage executed by Claudius Gibson to the said 11. H. Chinn, on. the 3d day of February, 1840, before Eli Harris, notary-public ; and that said land be forthwith sold according to law, to pay and satisfy the aforesaid mortgagee according to the rank aforesaid, and that the proceeds .of sale bo so .applied. It is further ordered that the succession of Claudius Gibson, j;ay the costs of bothnourts.